PVA is a water-soluble polymer, between plastic and rubber. The higher the degree of polymerization, the higher the viscosity, adhesion, and film-forming performance of the polyvinyl alcohol solution. With its unique properties such as strong adhesion, film flexibility, oil resistance, and solvent resistance, PVA is used in the production of adhesives, new building materials, and dispersants, with a wide range of applications, including the textile industry, construction industry, pharmaceutical industry, and biological engineering.
Industry Concentration Will Increase, The Head Enterprises Will Be the First to Benefit
Influenced by global health events, both sides of the supply and demand of PVA have been impacted. However, the industry is resilient, with the operating rate increasing from 60% at the beginning of 2020 to 90% at present. In addition, the price of polyvinyl alcohol bottomed out from May to June, and then maintained an upward growth overall. The epidemic has a certain impact on the industry pattern, eliminating the relatively backward enterprises and leaving the enterprises with stronger comprehensive competitiveness. The industry concentration is expected to increase, and the market pattern is expected to be optimized, which is conducive to the high-quality development of the industry. The market is in the stage of recovery, the head of the enterprise is expected to be the first to benefit.
The Consumption Structure Will Shift to High-Quality Functional Applications
In the early stage of production, PVA was mainly used in the production of polyvinyl. However, due to the shortcomings of polyvinyl fiber, such as uneven dyeing, poor rigidity, high cost, and inconvenient operation at high temperature, as well as a large number of high-performance synthetic fibers that can be substituted, PVA's market share in the polyvinyl industry was getting smaller. With the continuous progress of production technology and the diversification of downstream consumption fields, the process of PVA has been improved, and its downstream consumption structure has changed greatly.
China introduced the production process of polyvinyl alcohol in the 1970s, when it was mainly used in the production of polyvinyl fiber to solve the most basic problem of clothing. With the development of the national economy, high-grade textile, oil extraction, automobile, and building safety glass are rising gradually, and the demand for PVA products has increased greatly. The downstream consumption structure of PVA began to change. By 2015, polymerization additives and pulp ranked first and second in the consumption structure of domestic PVA, with a proportion of 38% and 20% respectively.
Downstream demand is widely distributed and market growth is driven by many factors. China's consumption of polyvinyl alcohol showed a steady growth. Public data show that the apparent consumption of PVA in China was about 313,000 tons at the beginning of the 21st century and increased to 696,000 tons in 2017. Since 2005, the apparent consumption growth rate of PVA in China has been fluctuating around 5%. It is expected that the demand for PVA will continue to decline in areas such as textile sizing and paper and that the increased demand will gradually shift to higher quality PVA and downstream new material applications. However, most of the products have high requirements on the quality of PVA raw materials, and the technical barriers of the industry are high. Compared with the international giants, the competitiveness of products produced by the acetylene method of calcium carbide in China is weak. As a result, domestic PVA consumption is less likely to explode in the future and is expected to maintain a growth rate of 5 to 6 percent.
Global Polyvinyl Alcohol Production Capacity Is Relatively Concentrated
At present, the global production of PVA is concentrated in some countries and regions, with China, Japan, and the US as the main representatives. The total global PVA production capacity is about 1.888 billion tons. Actual production in 2018 was about 1.39 million tons. The Asia-Pacific region accounts for more than 85 percent of the world's total PVA production, where China has the world's highest PVA production capacity, with about 753,000 tons in 2018, contributing 60 percent of global production capacity. China's northwest low-cost production capacity gradually realized supply replacement.
In recent years, China's PVA export shows a trend of accelerated growth, and the overall export situation is optimistic. Exports increased from 84,000 tons in 2015 to 147,000 tons in 2018, with a CAGR of 21%, and it is estimated that the current share of exports has increased to about 20%.
As the production of optical grade polyvinyl alcohol film technical content is relatively high, only a few enterprises in the world have the mass production capacity, and the industry market share is controlled by Japan Kuraray and Synthetic Chemistry. As the world's leading supplier of high-end polyvinyl resin raw materials, Kuraray has realized the comprehensive production from high-end polyvinyl resin to polyvinyl film for polarizing film and its surface treatment. At present, the total annual production capacity of Kuraray PVA optical film is about 200 million square meters, of which 70% of the global market supply of polarized film with PVA film from Kuraray, enough to see Kuraray's dominant position in the industry.
There are only two enterprises in China capable of producing PVA optical film, namely Changchun Chemical and Anhui WANWEI, which are in a relatively leading position. Among them, Changchun Chemical has two PVA production lines. After years of development, the production capacity occupies a high proportion of the total domestic production capacity. Another thing is that Anhui WANWEI is investing in the construction of a new vinyl alcohol optical film production, which is expected to achieve an annual capacity of 7 million square meters with a promising prospect.
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